Co-ops Build a Better World

by Erbin Crowell

In the wake of a global recession that continues to devastate communities and livelihoods, people are hungry for alternatives to corporate greed and stock market speculation. As we look at challenges such as climate change, unemployment and growing disparities of wealth and ownership, many of us feel discouraged and unsure of how we can make business more accountable to our communities and our visions for more just, sustainable, and resilient economies.

As we seek to build a better world, wouldn't it be great if we had a business model that was democratic, based on the principle of "one person, one vote" rather than "one dollar, one vote?" What if it was also rooted in our communities, owned by the people who use its products or services and depend on it for a livelihood? What it was values-based, designed to put the common good before private gain? What if it was flexible and innovative and could be applied anywhere in the economy? And would it be asking too much for this business model to be resilient in times of economic crisis, preserving local jobs and infrastructure?

Of course, these are not new questions. They have been front and center at other times of economic upheaval, such as the Industrial Revolution. As in our own time, the 1800s saw dramatic shifts in the global economy, characterized by staggering shifts in wealth, concentration of wealth and power, and severe unemployment. And, similarly, there was a search for alternatives that would enable people to have more control over their lives and communities.

For working people, a central challenge of the time was ensuring access to healthy, affordable food. In 1844, a small group of weavers, unionists, and democracy activists took matters into their own hands, founding a modest, community-owned grocery store in the North of England. While there had been many experiments in co-operative enterprise, the Rochdale Society of Equitable Pioneers established a set of economic principles that changed the world.

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Today, the co-operative movement is receiving renewed attention from, of all places, the United Nations. Reflecting on the global recession and the threat it posed to international stability and poverty reduction, the UN recognized that co-ops offered a solution. The resolution declaring 2012 the International Year of Co-operative, asserts that co-ops promote participation in the economic and social development of all people, including women, youth, older persons, persons with disabilities and indigenous peoples, and contribute to the eradication of poverty. UN Secretary-General Ban Ki-moon puts it more simply: "Co-operatives are a reminder to the international community that it is possible to pursue both economic viability and social responsibility."

So, what is a co-operative? Simply put, it is a business that is equitably owned and democratically controlled by its members for their common good, the good of the community and to accomplish a shared goal or purpose. Most states have specific statutes for the incorporation of a co-operative enterprise. In contrast to investor-driven business models, co-ops are driven by the needs and goals of their members, guided by the common good as opposed to the accumulation of private wealth. Any surplus left over at the end of the year is distributed among members not according to their investment but in proportion to their use of the business, or is reinvested in further development of the enterprise. And unlike non-profits, co-ops are owned by and accountable to their members.

As a global movement, co-ops are guided by seven principles established by the International Co-operative Alliance (ICA), including democratic member control, member economic participation and concern for community. In addition, co-operatives are values based, rooted in ideals of self-help, self-responsibility, democracy, equality, equity and solidarity, and the ethical values of honesty, openness, social responsibility and caring for others.

Co-ops are also more common than one might think. The ICA estimates that about 1 billion people worldwide are members of co-ops — more than directly own stock in publicly traded corporations. Globally, more people are employed by co-ops than multinationals. Although more than 1 in 4 Americans are members of about 29,000 co-ops in the US, the co-operative business model is largely ignored by business schools and academic institutions.

Here in New England and New York, there are an estimated 8,860 co-ops operating across our economy. Co-ops play a particularly important role in sustaining farms, fisheries and rural communities in our region. Businesses such as the Pioneer Valley Growers Association in Western Massachusetts and Deep Root Organic Co-op in Vermont enable produce farmers to access major regional markets while building shared infrastructure and distribution. Dairy co-ops such as Agri-Mark (Cabot), Our Family Farms, Hudson Valley Fresh and Organic Valley help preserve both agricultural livelihoods and landscapes while helping family farmers compete with corporations many times their size. Fishery co-ops such as Port Clyde Fresh Catch in Maine help fishermen pool their efforts and connect with consumers. And we shouldn't forget the Farm Credit system, a network of farmer-owned financial co-ops that provide lending services to their members.

Co-ops also play a key role at the other end of our food system. The Neighboring Food Co-op Association (NFCA) is a co-operative of 30 community-owned grocery stores and start-ups in Vermont, Massachusetts, New Hampshire, Connecticut and Rhode Island, with a combined membership of 80,000 people. Together, our co-ops have annual revenue of more than $200 million and employ over 1,400 staff. Taken together, our Vermont members would be among the state's top 25 employers. From large, multi-storefront food co-ops such as the Co-op Food Stores in New Hampshire and Vermont (founded in 1936) to the Monadnock Food Co-op, opening soon in Keene, NH, our members share a commitment to growing the regional economy. An independent study found that member co-ops purchased more than $33 million in local products in 2007.

But food is just the beginning of the story. The UN's designation of the International Year of Co-operatives represents a growing recognition that co-operative enterprise has been remarkably resilient in the current economy. From farmer co-ops to food co-ops, housing co-ops to energy co-ops, insurance co-ops to credit unions, and artisan co-ops to worker co-ops, co-operative enterprise preserves livelihoods, wealth and community infrastructure at a time of great instability.

Despite the continuing recession, co-ops are growing. In 2011, more than 7,000 people joined the member food co-ops of the NFCA, while on the national level the Food Co-op Initiative estimates that there about 200 communities in the process of launching new food co-ops. Worker co-ops are receiving renewed attention as models for job retention and sustainable livelihoods in a devastated economy. Farmer co-ops continue to grow and credit unions, benefiting from "move your money" campaigns, added over 1 million new members in 2011 alone.

An exciting trend is also emerging among entrepreneurs in our region who are working with their communities to convert their businesses to co-operatives. The Valley Alliance of Worker Co-ops has supported the transitions of Valley Green Feast in Northampton, MA, and the Brattleboro Holistic Health Center (VT) to the co-op model. In Shelburne Falls, MA, Franklin Community Co-op purchased McCusker's Market, ensuring its continuing operation in the town, and the Old Creamery Co-op, a much beloved rural grocery store in Cummington, MA, is in the process of becoming owned by its community.

Are co-ops perfect? Of course not. Like any democratic organization, co-ops must balance the sometimes conflicting needs and goals of their members. They also face the unique challenge of surviving in a competitive marketplace, which may involve compromises.

However, in our pursuit of a more just, democratic, and sustainable economy, co-ops may be our best bet. "Co-operatives are arguably the single most successful initiative for taking people out of poverty with dignity that the world has ever seen," argues Dame Pauline Green, president of the International Co-operative Alliance. "What's more it is a business model that puts people at centre of the economic model, rather than at its mercy!"

Taken together, co-ops bring some distinct strengths to efforts to build a thriving and resilient regional economy. For example, co-operative enterprises...

...are democratic, achieving scale without sacrificing local ownership and control.

...are difficult to move or buy-out, rooting business in the community.

...are values-based, emphasizing the common good as opposed to private gain.

...are flexible and innovative and can be applied to almost any community need or goal.

...are resilient and have a low business failure rate compared to other business models.

For all of these reasons, co-ops strengthen our communities, contributing to more stable food systems, infrastructure, employment, and services. What's more, they separate community wealth from the speculative markets that have shaken our global economy.

As the International Year of Co-ops draws to a close, co-operatives are working to carry this momentum into the future. Charles Gould, Secretary General of the ICA, asserts that "the real opportunity... is to use 2012 to help achieve a longer-term vision." The vision set forth by the ICA is of a Co-operative Decade in which co-ops become the fastest-growing model of enterprise by 2020.

Co-ops are both a viable model of enterprise and concrete expressions of economic democracy, self-help, and social enterprise — a way of doing business that puts people and community first. In short, co-ops build a better world. And there are many ways to get involved in this vision for a more co-operative future.

Erbin Crowell is Executive Director of the Neighboring Food Co-op Association, a network of 30 food co-ops and start-ups in our region, locally owned by more than 80,000 members (www.nfca.coop). He teaches a course on the co-operative movement at the University of Connecticut and serves on the boards of the Co-operative Fund of New England and the National Co-operative Business Association. Erbin may be contacted at erbin@nfca.coop.